Much Ado About Software Patents

A software company and the U.S. Patent and Trademark Office (USPTO), which granted it a broad
encryption patent in February 2001, have recently come under fire by a firm who claims the patent shouldn’t have been issued in the
first place.

Westlake Village, Calif.’s PC Dynamics is furious that patent 6,185,681 was awarded to MAZ Technologies, of Irvine, Calif.

Not only is the patent “absurd,” claims PC Dynamics President Pete Avritch, but MAZ is also demanding that his firm pay a $25,000
licensing fee because a PC Dynamics product, SafeHouse, draws on transparent encryption technologies. Because SafeHouse was crafted
in 1994, a full seven years before MAZ secured its encryption patent, Avritch claims MAZ has no right to seek money from him. And,
he said, the patent should never have passed muster. Why not? Because of the rules of prior art, which basically state that if an invention is
known or is being used by someone in the United States, another person who makes the same invention at a later date may not obtain a

That, according to Avritch, is precisely what has happened. The result is that he and several encryption software cohorts are
greatly upset. He sent out a charged press release about the matter earlier this month. Avritch also vented his displeasure with the
issue to and other media outlets.

“The process is prone to abuse and the PTO is apparently unable to differentiate the good from the bad. For curiosity, as I was
preparing my own press release, I searched the PTO database for software patents issued that day (happened to be March 26th) and
found patent 6,363,418 which covers caching images in web browsers,” Avritch said via e-mail. “Caching concepts have been around
since the beginning of computers. How is this novel? Should I now run out and get myself a patent on caching video or 3D wire
frames? Some of these concepts are so simple that I would fire a programmer for not being able to think them up on a moment’s

“The demand from Maz is based on a patent application filed in 1998, long after the widespread use of hard drive encryption,”
Avritch continued. “That application somehow failed to discover and identify a huge body of ‘prior art’ that included existing
encryption products, even encryption products used for decades by the U.S. government — which the PTO also somehow failed to
research before it approved the patent. Clearly, the PTO needs to re-examine and invalidate this patent.”

Of course, Avritch didn’t stop there. He enlisted fellow software makers to decry the patent system, including Bruce Schneier,
founder and chief technical officer of Counterpane Internet Security Inc. As the creator behind the Blowfish encryption algorithm
and Twofish, a finalist for the new Federal Advanced Encryption Standard, Schneier is a security software expert.

“The Cryptographic File System, written and made available in 1993, does the same thing,” Schneier said about the patent granted to
MAZ Technologies. “I expect this thing to be overturned quickly — it’s idiotic. It’s abuses of the patent system like this that
make it difficult for legitimate companies to develop and market technology products.”

Phil Zimmermann, inventor of the widely-used PGP (Pretty Good Privacy) e-mail encryption software had said this about the issue:
“Does the lack of reference to obvious and well-known prior art products indicate an ignorance on the part of the patent applicant
or a deliberate attempt to exclude those products from consideration as prior art by the Patent & Trademark Office? This illustrates
a festering problem at the PTO with how patents get issued. This patent cannot be allowed to stand,” said Zimmermann.

What is MAZ Technologies’ position in this furor? They’re playing it decidedly cooler. If they have any reason to sweat the claims,
it doesn’t show. While MAZ’ attorneys refused to comment, President Chris Mahne was more than happy to discuss the subject. He
claimed it’s merely an exercise to generate more sales.

“PC Dynamics’ only goal is to generate free publicity,” Mahne said. “Therefore, Mr. Avritch has not and will probably never
seriously consider the legal issues. Instead, he has tried to create a public outcry, akin to what he achieved with the Energizer
bunny dispute. There is one important difference this time around: PC Dynamics contacted MAZ and asked MAZ to send an infringement
notice. PC Dynamics is trying to paint itself as the victim of the PTO’s mistake and deceit by MAZ. On the contrary, PC Dynamics
seems to be trying to snow the technical community and the public to generate more sales.’

PC Dynamics is no stranger to patent validity squabbles. In the Energizer Bunny suit Mahne referred to, PC Dynamics published the
Energizer Bunny Screen Saver in the early 1990s. In 1994, the company was targeted as the first test of a patent claiming rights to
nearly all advertising or corporate logos appearing in software products. Coverage of the patent fight triggered Bruce Lehman, then
Commissioner of Patents for the PTO, to order a re-examination and invalidation of the patent.

Mahne continued: “The MAZ patent was the product of honest and serious research and development by MAZ’ engineering team. The
patented invention was a response to the unmet needs of MAZ’s customers and the lack of available and specific
technology that would meet these needs in the marketplace… Because PC Dynamics has not consulted with a patent attorney on this
matter, there has been no one to correct Mr. Avritch in his incorrect views of the MAZ patent and the prior art.”

Avritch whent on to bridge the gap in his argument, noting that a combination of lapsed patent judgement and a tricky patentee, can yield the type of position his firm finds itself in.

“To be clear, the law does not require you to disclose anything but what you know,” Avritch said “….but, how many people are using this loophole to their advantage, figuring that the PTO is way too swamped to really investigate as much as they should, or maybe they don’t have an
expert in a specific area so that something that is novel does not stand out as such to the examiner.

So should the patent process be revised? See Page 2.

While the back and forth between two warring patent encryption software makers may be fodder for bulletin boards and press articles
such as this, debate rages about whether or not the patent process needs to undergo some change. Is the USPTO process, as Avritch
claims, prone to abuse? Is it ineffectual? Two patent attorneys have different opinions.

Mike Jacobs, a top patent attorney for intellectual property law firm Morrison & Foerster L.L.P., told that there
are definitely problems with the way both software, and by extension, electronics patents, are issued by the USPTO today.

“It’s not working for it,” Jacobs said. “It’s the same system across all industries, and in reality industries vary widely in their
relationship between patent protection, and the time during which it attaches the need to protect information.”

For instance, Jacobs said that in niches such as pharmaceuticals and biotechnology, correlation between patent protection and
innovation is tight. He said a major reason for this is time and that in areas such as pharmaceuticals and biotechnology it often
takes a lot of experimentation to come up with the product. He cited aspirin as an example.

The problem, then, with the USPTO process as it applies to software is that product lifecycles are faster — too fast for the patent

“Maybe the industry has grown up around [the patent process],” Jacobs said. “One of the problems with prior art is that there is no
duty to search in your niche and find it. There is a duty to tell the patent office what you know, but there is no organized system
for inventors to do a systematic review to see if a product has been made.”

This means erstwhile patentees may not do the due diligence you’d think would be required. And for the other side of it, the USPTO
examiners who sit in their offices examining patents don’t do field research to see what has been done. This, Jacobs said, is where
the patent process breaks down concerning software products. And instead of getting better, he said it could only get worse as the
court of appeals for federal circuit has tried to tighten the screws, making it harder for examiners to reject patent claims.
Examiners, said Jacobs, are asked not rely on intuition and experience, but what the evidence shows them case by case.

Jacobs said a possible fix may lie in having advisory panels that would have more input into USPTO standards and procedures. To that
end, he also said leaving the patent systems to just the patent lawyers is not helpful. Uncle Sam could help.

“It’s very rare that patent concerns become high priority for Washington [D.C.] offices,” Jacobs said.

That’s Jacobs’ story and he’s sticking with it. Speaking of the nation’s capitol, Robert Koch, head of the Intellectual Property and
Technology practice at Fulbright & Jaworski L.L.P., vigorously defended the USPTO, saying that “As agencies go, I’ve never seen a
better agency.”

“The patent office does make mistakes, but for every mistake there are dozens of fine patents,” Koch told What I
have seen coming from the industry, is a lot of people that really don’t understand the law or what the system is set up to do. What
is really clear is the PTO issues lot of patents. Unfortunately, that’s what these firms latch on to criticize. My feeling as far as
the PTO performs its function admirably. It’s not subject to political interests, or fads.”

Koch’s defense of the USPTO comes in response to Avritch’s conclusions that the organization is face with “too many applications,
too few qualified examiners and a lack of access to meaningful databases.” Koch, who worked as a patent examiner from 1969 to 1971,
strongly disagreed with a number of Avritch’s points, but was especially doubtful of Avritch’s claim that the USPTO did not have a
single computer science expert in its mix in 1994 (the Energizer Bunny fiasco).

“I find it hard to believe that, at any time during its history, that there was no computer science engineer of some sort,” Koch
said. “Most patent office examiners are science geeks — not lawyers. Some are geeks and lawyers. They’re science guys. That’s the
why the agency is not prone to political pressure. Now, I’m sure there have been lazy patent examiners before, and continue to be a
few lazy examiners, but the idea that the whole process is flawed is not right. By and large, those people work really hard. It’s
not like any other government agency I’m familiar with. I know how it was. I was a chemist before and then an examiner and I thought
everything was obvious. I came from an industry. What you learn are patent law standards. You have to look at what is available and
what is known. You have to search all the right databases.”

While Koch didn’t have time to get completely familiar with this particular patent issue, he said if a company was confident that
the prior art exists, all they have to do is provide it to the patent office and it will go away. PC Dynamics, he said, could hire
an independent analysis, which could cost as much or more as the licensing fee that MAZ Technologies has asked for ($25,000).

“It bother me that so many people attack the patent system,” Koch said, in conclusion. “The whole patent system is grounded in the
U.S. Constitution. As a patentee, your right to exclude others is protected.”

Now, as for the USPTO, Deputy Director Office of Public Affairs Brigid Quinn told InternetNews.comn that it isn’t the organization’s
policy to comment on specific patent issues. Quinn did address Avritch’s charges that the USPTO is spotty, and instead focused on
the USPTO’s progress going forward, which does include revisions where it deems necessary.

“I think what’s important for those interested in the patent system to recognize is that the agency has new leadership,” Quinn said
via e-mail. “James Rogan, USPTO’s Director and the Bush Administration’s point person on intellectual property
policy, recognizes that to be effective, the agency is going to have to change the way it does business. Rogan has commissioned a
top-to-bottom review of agency operations so that USPTO is positioned to issue high quality patents, in optimum frames, that
America’s innovators need to advance the technologies that are fueling our economy, and improving the
quality of life for all of us.”

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